PARIS (MNI) – The rise in Eurozone unit labor costs slowed somewhat
in 1Q, while continuing to outpace those in most other developed
economies, the OECD estimated Thursday.
The cost of labor per unit of production in the Eurozone rose 0.5%
in 1Q in seasonally adjusted terms after +0.7% in 4Q, while the average
quarterly increase for the OECD bloc was steady at 0.3%.
Eurozone labor productivity recovered by 0.2% in 1Q after a 0.1%
dip in 4Q. This offset the acceleration in labor compensation per unit
of input from +0.6% in 4Q to +0.7% in 1Q.
A key component of international competitiveness, unit labor costs
edged up 0.1% in the United States in 1Q, fell back 0.8% in Japan and
rose 0.6% in the UK. The strongest quarterly gains among OECD members
were in the Czech Republic (+3.8%) and Korea (+3.3%).
Among reporting Eurozone countries, 1Q unit labor costs grew
fastest in Finland (+2.1%), where labor costs accelerated sharply, and
in Estonia (+1.5%), where labor productivity declined. Germany led the
larger economies (+0.9%), followed by France and Italy (both +0.5%). In
Spain, unit labor costs declined (-0.7%) for the third quarter in a row.
Labor costs in the Eurozone bailout countries should continue to
decline this year and next, helping to overcome some of the imbalances
at the root of the debt crisis. Even if labor costs in the most of core
economies moderate with the slowdown in economic activity and the rise
in unemployment, this should not derail the convergence process.
The economic slump will dampen wage gains, but labor productivity
is likely to fall faster at the outset, as staff reductions tend to lag
declines in output.
The OECD expects Eurozone unit labor costs to jump by 1.3% this
year after a 0.8% rebound last year, then slow to +0.8% in 2013.
–Paris newsroom +331 42 71 55 40; e-mail: ssandelius@marketnews.com
[TOPICS: M$X$$$,M$XDS$]
